According to many of Canada’s top economists, higher interest rates – and debt servicing costs – may be just around the corner. Exactly when rates will rise is unclear and depends on who you talk to.

In its latest Financial System Review, The Bank of Canada judges that vulnerability of Canadian households to adverse wealth and income shocks has grown in recent years. “At present, Canadian household finances appear quite healthy,” Governor Mark Carney says, but it is the responsibility of households now to ensure that in the future, when the recovery takes hold and extraordinary measures are unwound, they can still service their debts.”

The Bank of Canada still maintains it will hold the line on rates until July of this year, and many analysts believe rates may start to rise in the fall of 2010, with some expecting a full three percentage point hike by the end of 2011. Here’s a summary of a few of the forecasts for where interest rates are headed over the next year and a half:

TD Canada Trust Quarterly Economic Forecast

It was only a matter of time before Canada Mortgage Rates, which have plunged by almost 50% in the last year, turned higher. The days of ridiculously cheap mortgage rates appear to be over. Now they're just cheap. Here's the latest media roundup:

How high will mortgage rates go?

Recent increases in mortgage rates and bond yields have many home owners wondering how high rates will go, how soon, and what they should do to save the most money. They ask: Should I stick with a low variable interest rate? Or switch to a fixed rate?

Have you missed the great Canadian mortgage sale?

With interest rates hovering near dramatic lows, many Canadian home owners have been taking advantage of rock-bottom mortgage rates to break their existing contracts and refinance at a lower rate. But mortgage rates rose quickly and dramatically last week, leading some to wonder if they have missed the sweetest mortgage recession sale in recent history.

Recent changes to Canadian government guaranteed mortgages will soon make buying a home with zero-down payment thing of the past. News announced by the Minister of Finance has left the majority of Canadians mystified as to what removing the “government guarantee” from some of lending programs means.

My in-house Mortgage Professional Justin Risi explains...

Most understand how mortgage insurance works (not mortgage life and critical illness insurance, but mortgage default insurance). It’s a premium applied to your mortgage, paid to a mortgage insurer, who in turn agrees to insure your mortgage with your lender in the event you default. In other words, it is protection for the lender should their customer not make payments. This is a mandatory insurance for mortgages higher than 80% of the home value.

But what if a lot of people all suddenly can’t make their payments and the insurer responsible for protecting the lender is unable to cover their insurance obligations? The lender then faces a borrower not being able to make payments and an insurer possibly not being able to pay out insurance coverage!

Enter the government guarantee...

Listen to Scotia Bank’s Find the Money Podcast #8 and learn about perceived myths that prevent people from owning a home. Alison Strimas, Vice-President, Mortgages at Scotiabank describes how Canadians can get into a home sooner and gives advice to those who are still renting:

For the renters that are listening, I would suggest that they do a little bit of research. You’d be amazed at what you’re paying in rent on a monthly basis equates into a mortgage. For example, a $1,300 monthly rent payment could equate to approximately a $200,000 mortgage. And there’s all sorts of support pieces out there… especially on the internet, there’s calculators. We ourselves at Scotiabank.com have a rent-or-own calculator, so that renters can actually do a comparison to see if that’s an appropriate decision for them to enter the housing market.

You could take a zero down-payment type of mortgage, and feel very secure, especially for the first-time home buyer that you can afford this. And additional funds that you did have could be used for things like renovations, home improvements, furnishings if that would be the case, or just the sheer cost of closing the house and moving your belongings.

Download the MP3 & read the transcript.

Mortgage advisor Calum Ross shares with you the tips how you can be mortgage-free as quickly as possible:

1. Never get an open mortgage at a fixed rate unless you plan on paying it off during the term. Today's closed mortgages generally offer 10 to 20 per cent prepayment privileges, and can usually be obtained at one per cent or more off the posted rate.
2. Use accelerated weekly, or bi-weekly payments.
3. Give your mortgage the same raise as you get each year.
4. Give your mortgage a portion of any bonus or extra income.
5. Keep your payments the same even if you renew at a lower rate.
6. Use your income tax return to put a lump sum payment towards your mortgage.
7. Use extra money from your budget.
8. Round up your mortgage payments.
9. Consider a variable rate mortgage - those who can endure the rate adjustments save money over time.
10. Seek independent financial advice. While some bankers do look out for your best interest, they work for the bank and not you.

Read the full story in January issue of New Homes & Condos - GTA Magazine.

Ontario home owners will no longer lose their property as a result of a fraudulent sale, counterfeit power of attorney or fake mortgage! Key Bill 152 elements with respect to Real Estate Fraud are:

• Ensures that ownership of a property cannot be lost as a result of the registration of a falsified mortgage, fraudulent sale or a counterfeit power of attorney.
• Implements a streamlined and expedited Land Titles Assurance Fund process for individuals who are victims of fraud so that title is returned and a decision on compensation is made within 90 days.
• Introduces additional safeguards for suspending and revoking the accounts of fraudsters so that they cannot register documents.
• Raises existing fines for real estate fraud related offences to $50,000 from $1,000.

Canada welcomes over 300,000 new immigrants and foreign workers every year. For these families housing is a top priority, and New to Canada Mortgage Insurance Program by Genworth Financial is helping them own their home sooner, build equity, and become economically established in Canada.

To be eligible for the program, borrowers must have immigrated or relocated to Canada within the previous 24 months and have a valid work visa or landed immigrant status. In addition, they must have a minimum of three months full-time employment in Canada and as little as 5% for down payment. Borrowers transferred under corporate relocation programs are exempt from these requirements.

The down payment hurdle isn’t so high any more when buying your first home because Scotiabank has just introduced 100% Mortgage Financing, designed to help potential homebuyers purchase their home sooner. If you have not yet saved the standard 5% minimum down payment, with the Scotia 100% Mortgage Program, you can borrow the full amount of the property value of the home you want to buy. All 100% mortgages are insured through Genworth Financial Canada. Because your mortgage payments may not be any higher than your rent payments, it may be an ideal opportunity to buy your home now. This NEW Mortgage Program can help you with your home purchase!

globeandmail.com: Mortgage Rates

Gross	Maximum	Affordable	25%	Monthly
income	mortgage	home	downpayment	payment
$75,000	$270,594	$360,792	$90,198	$1,813
$100,000	$360,792	$481,056	$120,264	$2,417
$120,000	$432,950	$577,267	$144,317	$2,900

Mortgages

Interest rates have been rising, so should you lock in to a fixed-rate long term home loan?

My advice is to stay short, and stay with a below prime or variable-rate mortgage. You will have lower monthly payments, get rid of your debt faster, and still retain the flexibility to convert your mortgage in the unlikely event rates really jump. Remember that historically, borrowers have always been money ahead by not paying the extra interest required to lock into long-term loans.